Kering Sa Ord

Welcome to the Caring 2026 First Quarter Revenue Conference Call and Audio Cast. Please be advised that today's conference is being recorded. As a reminder, all participants are in a listen-only mode. At this time, I would like to turn the conference over to Amal Pulu, Group Chief Financial Officer. Please go ahead, Madam. Thank you.

Good evening to all of you and welcome to Caring 2026 First Quarter Revenue Call. We are speaking to you today from Gucci headquarters in Florence, just two days ahead of our Capital Market Day. I will be reviewing our performance, and we will be joined by Philippine Lechon, head of IR, for the Q&A session. Starting on slide 5, we introduce our new segment reporting, which was announced on March 16, and reflects the group's strategic priorities. We are now organized around four segments, carrying fashion and leather goods, including Gucci, Saint Laurent, Bottega Veneta, Balenciaga, McQueen, and Brioni. Carrying jewelry, bringing together Boucheron, Pomelato, Dodo, and Killeen. Carrying eyewear as a standalone segment, and corporate and other, which includes group services and jewelry 1735. Gucci is obviously part of carrying fashion and leather goods, but its performance will also be disclosed separately, given its weight in the group's revenue and our commitment to a high level of transparency in the context of the transformations currently underway. On slide 6, group revenue in the quarter came close to 3.6 billion euros, down 6% as reported, impacted by the strengthening of the euro, and stable year-on-year on a comparable basis. This stabilization represents an important first milestone and a further sequential improvement. It was delivered in a challenging and uncertain environment with low visibility and continued pressure on consumer confidence. Geopolitical tensions, notably in the Middle East, also weighted on traffic and performance during the quarter, a point I will come back to. Regional trends remained uneven. Western Europe continued to face headwinds, while North America delivered an excellent quarter with growth across all brands, clearly standing out as the group's strongest region. Q1 also demonstrated continued progress in terms of ambition and balance sheet strengthening. We executed several major strategic moves across jewelry, beauty, and real estate, clearly sharpening the group's focus and significantly enhancing our financial flexibility. In jewellery, we announced the creation of Canning Jewellery and finalized our initial 20% stake in Ravelli Franco, one of the largest independent luxury jewellery manufacturers in Europe. This marked a major step in building a sizable industrial platform to support long-term growth in jewellery with a clear pathway to full ownership. In beauty, we completed our strategic partnership with L'Oréal with the disposal of Kéline Bauté for 4 billion euros in cash and continued cooperation through a joint venture to explore opportunities in longevity and wellness. In real estate, consistent with our commitments, we completed a new refinancing transaction for our Via Monte Napoleone asset in Milan, following similar partnerships in Paris and New York, enhancing balance flexibility while securing strategic locations for our houses. In parallel, we continue to optimize our distribution network and set that vigilance on both CAPEX and OPEX while never compromising the actions required to preserve and strengthen the brand equity of our houses. Moving on to our quarterly revenue in more detail on slide 7. As you can see, performance remains uneven across segments, although sequential trends are positive across the board. Caring, Passion and Leather Goods declined by 3% on a comparable basis, representing a sequential improvement of 2 points versus Q4. Within the segment, Gucci was on 8%, also showing a sequential improvement, as the house continued to make progress in its turnaround. Kering Jewelry delivered another very strong quarter, up 22% on a comparable basis, clearly standing out as a growth engine for the group. Performance was supported by strong brand momentum and solid execution across regions. Kering Airwear grew by 7% on a comparable basis, once again confirming the strength, consistency, and resilience of this business driven by the breadth of the portfolio and continued operational execution. Finally, corporate and other was up 10% on a comparable basis over the first quarter, notably driven by the very strong performance of January 1735. Overall, our geographic mix remains well balanced with only modest shifts during the quarter, Asia-Pacific and the rest of the world were down 1 point, while North America and Western Europe each gained 1 point. On slide 6, let's review the top line by channel and region. Retail, accounting for 71% of revenue, was down 2% on a comparable basis. Within retail, e-commerce moved 6% year-on-year and represented 12% of retail sales. Western Europe declined by 7% comparable in the quarter. France remained challenging, particularly due to softer tourist flows, notably from Asia and Middle East. North America delivered a very strong quarter of 9% comparable, clearly standing out as the best-performing region, driven by a favorable mix stood toward the high end, with positive contributions from all brands, including Gucci. Japan declined by 3% comparable, a marked improvement versus previous quarters. Performance continued to be driven by the jewelry houses. Tourist spending remained negative, reflecting a less attractive pricing gap, while demand from local clients turned positive. Asia-Pacific declined 4% comparable, an improvement of 2 points compared with Q4 after 5 points between Q3 and Q4. Strong performances in South Korea, Hong Kong, and to a lesser extent Taiwan, were not sufficient to offset the decline in mainland China. As in Q4, the Chinese cluster ended the period down in the big teams. Finally, the rest of the world declined by 8% on a comparable basis, mainly reflecting a deterioration in performance in the Middle East since the beginning of the conflict in the region. Our retail network, comprising 1,672 stores, showed a net increase of 47 units compared with year-end. Over the period, Gucci's store count declined by 11 net units. In line with the commitment set out at our 2025 full-year results, we reaffirm our objective to achieve at least 100 net store closures by the end of December. Wholesale and other revenue, accounting for 29% of the total, was up 6% comparable in the quarter, with a continuing good momentum in eyewear. Let's now move to killing fashion and leather goods on slide 9. Revenue stood at 2.9 billion euros, down 9% reported and 3% comparable. The retail channel showed a similar trend, declining by 4% on a comparable basis. You will find the usual details by region in the appendix of the presentation. Before turning specifically to Gucci, let me first say a few words about the other brands within the segment. Saint Laurent, Bottega Veneta, Balenciaga and Brioni delivered year-on-year growth in the quarter, notably led by North America. At Saint Laurent, Results reflected a very strong performance in shoes and ready-to-wear, combined with a successful rollout of new products, including the Mombasa handbag. Bottega Veneta showed solid trends in Asia Pacific, underpinned by a robust product pipeline and sustained brand desirability, with good traction in the full-price network and an increase in average unit retail on handbags. Balenciaga delivered another quarter of growth, supported by sustained demand in leather goods, building on the success of the city and rodeo lines. Prigioni confirmed a very positive momentum over the period, with particularly strong growth in bespoke. As expected, McQueen continued its rationalization, in line with the actions undertaken to reset the brand. Wholesale and other was up 2%, with royalties and other revenue increased by 6%. Focusing on Gucci, now on side 10. The house recorded sales of 1.3 billion in the first quarter, down 14%, as reported, and 8% on a comparable basis year-on-year. North America delivered a solid performance of 7% year-on-year, driven by strong newness and increasing AUR, providing early confirmation that the strategic reset is starting to gain traction. This momentum, however, was not sufficient to upset weaker trends in Asia-Pacific and Western Europe during the quarter. Beyond the short term, the quarter was firmly execution-driven, marked by decisive actions across product distribution and client engagement. We have refocused product architecture, strengthened category priorities, and are progressively rolling out new collections in stores. The introduction of See Now, Buy Now initiatives, even though it applies to a limited number of products, is designed to improve responsiveness, sharpen newness, and better align product growth with client demand. Looking ahead, upcoming milestones are meaningful. Our capital market today will provide greater visibility on the Gucci roadmap, while the cruise show in New York next month will be another key moment to showcase the brand's renewed creative energy and product direction. While the recovery will be gradual, the fundamentals are being rebuilt in the right order. With disciplined execution, clearer creative leadership, and a sharper focus on core clients and products, We are confident in Gucci's ability to progressively restore momentum and create long-term value. On slide 11, Kering Jewellery delivered an outstanding performance, reaching a return level. Sales were up 14% as reported and 22% on a comparable basis. In the directly operated retail network, sales grew by 28% while all sale revenue increased by 14%. Performance was broad-based across key regions with standout demand in Japan and Asia-Pacific, notably in South Korea. Brand momentum at Boucheron was positive this quarter, with the house delivering the highest growth within the group, supported by robust performance across its main markets. Pomelato also posted solid growth, supported by strong traction in Japan, and thanks to the new Dodo, Iconica, and Together collections. Dodo extended several quarters of the stand growth, while Seagulls recorded a strong performance driven by Asia. Beyond the quarter, Kering Jewelry continues to confirm its role as a structural growth engine for the group. The category benefits from strong underlying fundamentals and from the disciplined way we are selling it across houses and regions. With strong brand desirability, a growing retail footprint, and an increasingly integrated industry of backbone, we are confident in jewelry's ability to increase its contribution to group revenue over time. On slide 12, revenue of Kering Eyewear division. Kering Eyewear delivered a landmark performance, marking the strongest quarter in its history. Sales amounted to 489 million, up 3% as reported, and 7% on a comparable basis, reflecting very strong demand across the portfolio. This performance, once again, highlights the strength, resilience, and scalability of the iWear platform. Growth was supported by a combination of high-profile product launches, including the first Valentino iWear collection, developed by Tending iWear, strong sell-out momentum, and successful commercial execution around major industry trade events. Marketing and communication initiatives across brands also played an important role, reinforcing visibility and desirability, while execution remained consistently strong across key markets. Beyond supporters, iWear continues to demonstrate the relevance of our integrated model, combining brand desirability, industrial expertise, and disciplined execution. With its diversified brand portfolio and recurring demand profile, King Eyewear remains a highly attractive and reliable growth engine for the group. On slide 13, I will make a few comments about the corporate and other segments. In the first quarter, revenue from corporate and other amounted to $30 million, down 7% as reported, and up 10% on a comparable basis, with the variance mainly explained by scope effects. Within the segment, January 1735 delivered a very good quarter, with double-digit growth, reflecting continued progress in brand development, positioning, and desirability. Before turning to our outlook, let me briefly address the situation in the Middle East. Since the end of February, the situation in the region has remained an area of heightened attention for the group. Our priority is and remains the safety of our teams. To date, none of our employees has been directly affected. The region represents around 5% of our retail revenue, with approximately 1,100 employees and 79 stores. The crisis unit was immediately activated and continues to manage the situation in real time. While some areas experienced temporary disruption, the retail network is fully operational today. In the first quarter, retail revenue in the region declined by 11% after a positive start to the year. Beyond the local impact, the key consideration going forward leads to potential effects on global tourism flows and is a broader macroeconomic environment which we continue to monitor closely. After all, we are operating in a still uncertain geopolitical and macroeconomic context. In this environment, our focus is on agility, discipline, and flawless execution. We are equipping each house with sharper, more sustainable brand strategies, and the operational capabilities required to accelerate progress. As we move through 2026, our objective remains to return to growth and improve margins. We look forward to sharing more details on our strategy and roadmap at our Capital Markets Day on Thursday. And with that, we are now ready to take your questions. Operator?

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star 11 on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A queue. If you wish to cancel your request, please press star 11 again. Please ask your question as distinctly as possible and put all devices on mute apart from the phone you are using to ask your question. We will now go to the first question. One moment, please. And your first question today comes from the line of Thomas Chauvet from Citi. Please go ahead.